Thanks to AI, the appetite for cloud services is growing. Cloud expenditures more than doubled between 2019 and 2023, and are expected to eclipse $2 trillion by 2030, according to Goldman Sachs Research.
Poor spend management can put ROI at risk, however. Yodar Shafrir discovered this while working at Run:AI, the workload management startup Nvidia is attempting to acquire.
“I saw first-hand DevOps teams’ frustration due to resource inefficiencies,” Shafrir told TechCrunch. “I observed the high costs of unused resources and saw applications crashing due to the lack of sufficient resources. The constant pressure on engineering teams to fine-tune application resources often took time away from core development work.”
Guy Baron, who was head of R&D at Wix at the time, sympathized with Shafrir’s plight. He met Shafrir as a customer, and the pair got to talking. Months later, they decided to found a startup that focused on solving their shared problem: optimizing cloud resource usage.
That startup, ScaleOps, operates in a niche of cloud spend management tools known as FinOps. It’s a crowded niche, however, with competitors such as Broadcom-owned CloudHealth, IBM’s Kubecost and Cloudability, and startups like Exostellar, Ternary, CloudZero and ProsperOps.
Like its rivals, ScaleOps tries to automate cloud management for companies based on the performance requirements of individual apps. ScaleOps analyzes an app’s requirements, taking into account available resources and cost considerations, and works to minimize the size of the app’s cloud services footprint.
ScaleOps, which is self-hosted, can run on any cloud, on-premise or air-gapped environment, said Shafrir (CEO).
“ScaleOps automates resource optimization to reduce waste, improve performance and streamline workflows between DevOps, FinOps and application teams,” he added. “This value proposition resonates strongly with companies seeking to optimize their operations during economic downturns.”
To Shafrir’s point about resonance, ScaleOps’ customer base (which includes SentinelOne, Cato Networks and Wiz) seems to be expanding healthily: He expects the roster to grow to over 100 brands by the year’s end.
That traction has also helped the startup attract investment. This month, the company closed a $58 million Series B funding round that brought its total capital raised to $80 million.
Shafrir wouldn’t disclose details of ScaleOps’ revenue and burn rate, but he said the company maintains “a prudent financial strategy” to “ensure sustainability and growth.”
It’s certainly to ScaleOps’ benefit that FinOps has gone mainstream. According to a recent survey, more than four in five companies now have a formal FinOps team in place, and another 16% are actively considering adding one. Seventy-one percent of respondents to the same survey said that their investment in FinOps increased last year.
“The broader slowdown in the tech industry has heightened the focus on operational efficiency and cost optimization,” Shafrir said.
Lightspeed Venture Partners led ScaleOps’ Series B, the proceeds from which will be put toward growing the New York-based company’s headcount from 60 people to more than 200 by 2026. NFX, Glilot Capital Partners, and Picture Capital also participated in the round.
